Magazine article American Banker

Webster Cutbacks Hit Branch Plans

Magazine article American Banker

Webster Cutbacks Hit Branch Plans

Article excerpt

Webster Financial Corp. of Waterbury, Conn., is joining a growing list of banking companies taking steps to hold down costs.

Webster, known for its steady branch-building, told analysts when it reported fourth-quarter earnings that it will slow the pace this year to trim expenses. It will open six branches this year instead of nine, it said.

"We are very bullish on our de novo program, but we recognize the environment we're operating in requires us to manage the expenses more tightly than we might like," said James C. Smith, Webster's chairman and chief executive.

Webster has nearly 160 branches and has opened 19 since March 2002, including eight last year and two that were to open this past weekend in Westfield, Mass., and West Springfield, Mass.

The newest branches are its first in western Massachusetts and would give it 21 in a state it entered in May 2004, when it acquired FirstFed America Bancorp of Swansea, Mass. It opened its first de novo branch outside of its Connecticut, in Westchester County, N.Y., in March 2004, and has added five more there since. It also opened two in Rhode Island last year to go along with the seven it inherited as part of the FirstFed deal.

"We're making a bit of a sacrifice here by cutting back from nine to six," Mr. Smith said Thursday in the analyst conference call.

The $17.8 billion-asset company is sticking to its plan to open nine branches in 2007 and will look into cutting costs in other areas, he said. He did not elaborate.

Matthew B. Kelley, an analyst at Moors & Cabot Inc., said Webster's decision was "prudent" and a function of the interest rate environment. …

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